scenario planningv1 2003 1
TRANSCRIPT
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An Introduction to
Scenario Planning
Rohit Talwar ± FastFuture
www.fastfuture.com
+44 (0)20 7435 3570
+44 (0)7973 405 145
Accelerating Innovation
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Agenda Open the Door and Let the Future in
± The future ± what does it hold, why should we care, how can we study it? ± Using the µdriving force¶ approach to scenario planning to create fast insights
into alternative futures
Accelerated Scenario Planning Exercise ± Defining the Driving Forces ± Identifying the driving forces shaping our
environment ± Crafting Scenarios
Assessing the Scenarios - implications and options for our customers andthe industry
Assessing the implications ± How well do our current strategies stand up to these scenarios
± What will stay the same, what will need to change?
Markets, Products, People, Processes, Infrastructure, Finances,Knowledge Management, Innovation
Closing discussion ± how do we apply these tools in our day jobs?
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Our ClientsPanasonic
IceTek
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Our Services
Analysis of Future Trends,Drivers & Shocks / Technology Watch
Accelerated ScenarioPlanning & FutureMapping
Identification of
Opportunities forInnovation and StrategicInvestment
Strategy Creation &Development ofImplementationRoadmaps
Design & Facilitation ofInnovation, Incubation &
Venturing Programmes
Expert Consultations &Futures Think Tanks
Personal Futuring forLeaders and LeadershipTeams
Public Speaking, In-Company Briefings,Seminars and Workshops
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The Challenge - Developing
Strategies in an Uncertain World
What factors should include when bidding for and planning long term projects?
How do we cope with risk and uncertainty?
How do we select the right indicators to track?
How do we identify key trends and developments?
How do we spot the potential for major discontinuities?
How do we plan, operate and survive in a turbulent and fast-changing world?
How do we handle those not playing by µour rules'?
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Time Periods for Viewing the Future
Near Term Future - Up to one year from now
Short Term Future - One - five years from now
Mid-Term Future - Five - twenty years from now
Long Range Future - Twenty - fifty years from now
Far Future - fifty plus years from now
Source Earl Joseph
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7 Attitudes Toward the Future
P rovidential / Fatalistic - what will be will be
Conventional - tomorrow will be much like today
P essimism - decline from past µGolden Age¶
Discontinuity - the future will be nothing like the present
Optimism - faith in progress / technology cures all
Unknowable - futile to attempt to go beyond the present
Futurist - tempered optimism / the future is rich withpossibility resulting from human planning and action
Source Prof. Howard F. Didsbury Jr
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8 Dimensions in Most Futures
Physical Environment including health
Socio-Cultural
Legal, Moral and EthicalPolitical
Economic
Military, Defence and Security
Science and Technology
The Commercial World
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Forecasting Methods
Genius Forecasting
History
Trend projection
(Extrapolation, Growth
Curves)
Correlation
Causal Methods
Polling / Scanning
Technology Forecasting
Scenarios Delphi Studies
Morphological Models
Relevance Trees
Mission flow diagrams
Technology Assessment
Trend Impact Analysis Cross-Impact Analysis
Systems Approach
Simulation
Cycles (e.g. Kondratieff)
Social Indicators
Chaos Theory
Source Prof. Howard F. Didsbury Jr
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The CIA¶s Global ScenariosInclusive Globalisation
A virtuous circle develops, enabling a majority of the World¶s people to benefit fromglobalisation. Conflict is minimal within and among states benefiting from globalisation.
Pernicious GlobalisationGlobal elites thrive, but the majority of the world¶s population fails to benefit from globalisation.Internal conflicts increase, fuelled by frustrated expectations, inequities, and communal tensions
Regional CompetitionRegional identities sharpen in Europe, Asia, and the Americas, driven by growing politicalresistance to US economic hegemony. Military conflict among and within the three major regions does not materialize, but internal conflicts increase among the countries left behind.
Post-Polar World
US domestic preoccupation increases as its economy stagnates. Economic and politicaltensions with Europe grow, and US-European alliance deteriorates. Instability in Latin Americaand Asia force those regions to also turn inward. Given the priorities of Asia, the Americas andEurope, countries outside those regions are marginalized, with virtually no sources of political or financial support.
CIA Global Trends 2015
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Scenarios - A Definition
³T he precise definition of µscenario¶ is:
a tool for ordering one¶s perceptions about
alternative future environments in w hic h
one¶s decisions mig ht be played out.
Alternatively:
a set of organised ways for us to dream
effectively about our own future.´
Peter Schwartz, The Art of The Long View (Doubleday Currency, 1992) p4
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An Effective Scenario
Tells a story about possible future changes in a particular µsystem¶, domain, environment, society, etc.
Engages the imagination
Is written in the past or present tense - as if the forecasted
trends and events had already happened Helps clarify the causes and consequences of key
developments
Challenges our current thought processes and assumptions
about the future Enables us to define and assess a range of alternative
policies, strategies and actions
Is seen as relevant and an important element of the strategic
process
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Scenarios Challenge us to
µRehearse the Future¶
Peter Schwartz, The Art of The Long View
E ngaging the Future - ³using scenarios is rehearsing the future. You run
through the simulated events as if you were already living them. You train
yourself to recognize which drama is unfolding. That helps you avoid
unpleasant surprises and you know how to act.´ (p.200)
Role Playing - ³by the end of the session, managers (at Shell) understood the
implications of each possible future, because they had literally rehearsed
them´ (p.205)
C hallenging Beliefs - ³that was the reason for creating the scenarios in the
first place´ (p.202)
C hanging Behaviour - ³the test is not whether you got future right... The real
test is whether anyone changed his behaviour because he saw the future
differently. And did he change his behaviuor in the right direction?´(p.214)
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S cenario P lanning may be Valuable but...
We don¶t have enough time
We haven¶t got the budget
We¶re not convinced
Our people are very cynical
We have a long term plan
We are too busy with current projects
We are a numbers organisation
«S o is t here a way we can prove t he value quickly?
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How Can Accelerated Scenarios Help?
To introduce and help µsell¶ the value of future thinking
To help shape strategy and drive fundamental change
To µopen the door and let the future in¶ - and thus help
overcome resistance to change
To help focus teams on their goals at the start of key projects
To surface and sense check assumptions
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Applying Accelerated Scenario Techniques
BellSouth - Understand impact of the µNew Economy¶
Thames Water Utilities - Introducing and Assessing the Concept
Environment Agency - Management Team Development
Yellow Pages - Development of Business Blueprint
Capture Thinking on Fast Forward
programme
Chloride - Senior Management Development
µShort Sharp Shock¶ to Drive Growth
East of Scotland Water - Initiation of Business Review
Orange - Knowledge Sharing and InnovationProgramme Launch
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An Example Scenario - Britain 2006
Britain today is a thriving economy that has recovered well from the recession of 2001-2. Although its about turn
on the single currency remains a source of tension with its European partners, Britain remains a major influence in
the 40 member EU.
The economy has experienced continuous growth over the the last three years and a significant transformation in
employment patterns. London in particular has responded well to the continued migration of financial services
operations to Frankfurt, Yorkshire and the Internet. The capital is now the centre of Europe¶s multimedia industry -
with over 2 million of its working population now involved in Internet / multimedia related businesses.
The general level of Internet usage in Britain has risen dramatically over the last three years as a result of the joint
venture between BT&T, Microsoft and Amazon.Com to provide free PC¶s to every home and office. Take up has
been particularly strong amongst the wave of new businesses created on the back of the re-elected Labour
government¶s innovative programme to create a million new businesses in the five year period 2003 - 2008.
Of the 600,000 new businesses created so far, many have been in the fields of new media, professional services,
construction related trades and the booming fields of personal development, coaching and therapy. The need to
create these new businesses was driven by the construction boom and continual trend towards Globalisation and
the shift of production and service jobs to lower cost countries in Eastern Europe and Asia.
The population has become almost immune to the regular terrorists attacks on infrastructure and essential
services. The Government continues in its attempt to create a coherent homeland security policy and approach
spanning all of the key Departments involved in Defence and Security. The politics of Whitehall continue to
hamper real progress. The shift in Defence policy towards combating terrorism continues but effectiveness is
hampered by lengthy procurement cycles and the extra administrative overhead created by the latest µquality,
value and effectiveness¶ targets and reporting requirements. The tensions between Britain and the USA continue
despite efforts by President Hilary Clinton to heal the rifts that developed during the conflicts in Iraq, Saudi Arabia
and Kashmir and in the subsequent peace stabilisation efforts.
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Typical Approaches to
Scenario Development
Discussion and debate -
with or without source data
System Change -
evaluation of every parameter
under different conditions (e.g.
treasury model)
Driving Force -
identification and assessment of
the fundamental influencing factors
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Developing Scenarios Using Driving Forces
Gather
Data
Identify
Driving
Forces
Build
Scenarios
Political
EconomicSocial &
Demographic
Technological
& ScientificEnvironmental
Commercial
& Business
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The Basic Scenario Process
1. Assess t he Current S ituation
2. Gat her t he Data
3. Identify t he Driving
Forces
4. Generate Alternative
S cenarios
5. Assess t he
Implications
for your
Environment
6. Assess t he
Implications for your Organisation
7. Define S trategy and P lans
8. Implement and
Monitor
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Example Driving Forces
Political
DF1 - Britain¶s Attitude to t he EU
Total harmonisation
Gradual alignment
Growing divergence
Fortress Britain
DF2 - P olitical S tability of Europe
Technological and Scientific
DF1 - Impact of Wireless Tec hnology
µRemote control for life¶
Gradual take up of 3G/4G services
Technology slow to deliver
Health concerns restrict usage
DF2 - Genetic Medicine
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Example Driving Forces
Economic
DF1 - Level of Growt h
Wired¶s µLong Boom¶
Consistent increases
Zero growth
Unshakable recession
DF2 - Economic Healt h of Japan
Physical Environment
DF1 - Impact of Environmental Legislation
Encourages shift to paperless business Drives up costs
Eliminates business sectors
Negligible effect on most businesses
DF2 - P ollution Levels
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Example Driving Forces
Social and Demographic
DF1 - Work - Life Balance
24/7 Society
60 hour working norm
Resurgence of 9 to 5
3 Day working week
DF2 - P opulation Growt h
Commercial & Business
DF1 - P revailing Business P hilosophy
Short term shareholder returns
Long term value creation
Socially responsible business
Family friendly businesses
DF2 - Impact of Globalisation
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Example Driving Forces
Legal, Moral and Ethical
DF1 ± P ersonal Identity
Identity chip inserts by 2007
Identity cards for all
Immigrants forced to carry ID
No personal ID¶s
DF2 ± Attitudes to War
Military, Defence and Security
DF1 ± P rivatisation & Outsourcing
All services brought back in-house
Only non-core services outsourced
Transport, logistics and property outsourced
Everything bar combat outsourced ± including peace keeping
DF2 ± T h
reat of Terrorism
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Defining Driving Forces
Working in syndicates, you will be allocated a heading (e.g.Political)
Define two driving forces within that heading which you think
will have a major impact on shaping the environment for your
customers over the next 5 years (e.g. extent of regulatory
control, political stability)
For each driving force define at least four different possible
outcomes
Write the name of each driving force and the outcome on a
separate post-its (you should have at least four post-its per
driving force)
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Defining Scenarios
Working in syndicates, select one of the outcomes from each of the driving forces defined earlier - the outcomes chosen do not
have to fit together logically
Using the set of outcomes as a start point, develop a plausible
scenario of what your firm¶s µstate of our world¶ report would
look like on January 1st 2007
You can present your scenario back in whatever way you think
most appropriate - picture, one act play, news report, day in thelife, etc.
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Assessing the Implications
What will there
strategic priorities be?
How will they do
business?
What will be their key
requirements of
suppliers?
How will they evaluate
supplier performance?
What pressures will the
industry face?
What new entrants
might emerge?
What will the trends be
in size and scope?
What capabilities will be
critical?
Who could be best in
class?
For Customers For Suppliers
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Evaluating The Scenarios How well do our current strategies stand up to your scenario?
Target Markets
Core Offerings
People
Processes
Team Structures
Infrastructure
Project Financing
Knowledge Management
Innovation
S tay the S ame Change